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Apr 08, 2014

CALIFORNIA: Collective Bargaining Agreements Can Determine Overtime Compensation

Labor RelationsWage and Hour 

Collective bargaining agreements (CBAs) can, in certain cases, override strict state laws on overtime, ruled a California court of appeals. 

Collective bargaining agreements (CBAs) can, in certain cases, override strict state laws on overtime, ruled a California court of appeals. Unionized production and maintenance workers at Exxon’s Santa Ynez facility worked 12 hours a day for seven days in a row, followed by seven days off. According to California labor law, workers are entitled to time-and-a-half for working more than 40 hours in a week or working more than 8 hours but fewer than 12 hours per day. These workers sued based on the fact that they were not paid overtime wages for work performed between the eighth and twelfth hours.

The court ruled against the workers because there was a valid CBA in place that covered these alternative scheduling and payment options. California Labor Code 514 says the state’s rules on daily overtime don’t apply if a CBA “expressly provides for wages, hours of work, and working conditions of the employees, and if the agreement provides premium wage rates for all overtime hours worked and a regular hourly rate of pay for those employees of not less than 30 percent more than the state minimum wage.” The employees said the CBA failed to provide a premium wage rate past the eighth working hour, and therefore should not fit the exemption. The court considered the Division of Labor Standards Enforcement (DLSE) Policy Manual, as well as DLSE opinion letters that stated if through collective bargaining, parties wanted to negotiate their own terms defining when and under what circumstances overtime pay was to be triggered, that would override state law.  Because the Exxon workers’ union had agreed to terms that differed from California state labor law, the workers were not entitled to overtime pay between 8 and 12 hours of work per day (Vranish v. Exxon Mobil, Cal App, Jan. 2014).

In addition, many employers have a rule against working overtime unless it has been pre-approved. It’s important to understand that your overtime policy doesn’t change your obligation to pay overtime if employee works it.

Tips:  California’s daily overtime rules are complicated. You should familiarize yourself with the rules, along with any negotiated wages in CBAs. Refer to Vigilant’s Legal Guides, “Daily Overtime in Oregon and California” (4063) and “Alternative Workweeks in California” (4526), or call your Vigilant staff representative with specific questions.

This website presents general information in nontechnical language. This information is not legal advice. Before applying this information to a specific management decision, consult legal counsel.